13020 Views September 15, 2015 GOLD, KWN, KWN II King World News
As the world awaits the Fed decision this week, the Godfather of newsletter writers, 91-year-old Richard Russell, says the U.S. has a ticking time bomb, rigged markets and a desperate Fed. The legend also covered the major markets and the ultimate refuge.
September 15 (King World News) – Richard Russell: “Normally, free markets allocate capital very efficiently. But the Federal Reserve has taken over the free market and as a result, money has gone mostly to the upper 1%. One of the results is that savers are unable to get satisfactory returns on their money.
In desperation, Americans have turned to junk bonds as a source of income. Long-term Treasury bonds sell at fantastic prices and provide yields in the 2-3 % range.
U.S. Has A Ticking Time Bomb
With the government backing student loans, these loans have gone crazy and now amount to over a trillion dollars. Most of these will probably never be paid back, leaving students with masses of debt that they can never repay.
Turning to the markets, I didn’t like two of my key indicators, the Dow Jones Transports and the Nasdaq, both closing lower. Furthermore, I didn’t like the NYSE closing below its big number of 10,000.
A Desperate Fed And The Ultimate Refuge
My conclusion is that the market is bearish and we’re positioned as we should be – out of common stocks and in bullion silver and gold. The world is still waiting to see if the Fed has the courage to raise short rates. For some reason the Fed believes the US economy is stronger than it actually is.
But I think the Fed senses that something is wrong. Therefore I think the Fed will hold off on a rate hike. If a rate hike is in the cards, it will not come until 2016 at the earliest. And if the Fed does hold off on a rate increase this year, people will sense their uncertainty about the economy. The Fed has painted itself into a box whether it raises rates or not. The action from Wall Street will be negative.
Turning to politics, experts are amazed at Donald Trump’s popularity. Trump disparages the government and expresses what the common man feels, which is anger and desperation at the current state of the US. Voters feel that politicians are spouting a lot of what they want the population to believe. But voters are disgusted with the usual political talk. Trump’s voice is the voice of anger and protest.”